October 2, 2007—The ‘final' estimate by the BEA indicates that the GDP grew 3.8% in the 2^nd quarter. Personal income rose 0.3% in August while consumption grew 0.6%. The housing market is still in bad shape, as new home sales and existing home sales decreased 8.3% and 4.3%, respectively. Last, new orders for durable goods fell 4.9% in August.
 
Gross Domestic Product
The ‘final' estimate by the BEA indicates that the GDP grew 3.8% in the 2^nd quarter, rebounding from the anemic 0.6% increase in the 1^st quarter. GDP growth was driven by an improvement in the trade balance as well as stronger government spending. The weak housing market continues to be a negative weight, but its drag on growth is gradually decreasing. Corporate profits set a new record, increasing $94.7 billion to $1.642 trillion. Last, on a year-ago basis, the GDP has increased 1.9%, well below its growth potential of 3.0%.

Personal Income
Personal income rose 0.3% in August, a deceleration from the 0.5% increase in July. Concurrently, consumption grew 0.6%. On the inflation front, the numbers were encouraging. The top-line PCE deflator fell 0.1% while the core PCE deflator, which excludes food and energy, grew only 0.1%. On a year-ago basis, both the PCE deflator and the core PCE have increased 1.8%. Lastly, the saving rate worsened in August, decreasing to 0.7%.

New Home Sales
New home sales plummeted 8.3% in August to 795,000 units (seasonally adjusted annual rate). Furthermore, sales on a year-ago basis are down 21.2%. The median sale price of a new home was $225,700 in August, down from $246,200 the previous month. Last, inventories jumped 7.9% to 8.2 months of supply and compared to a year ago are up 20.6%.

Existing Home Sales
Sales of existing homes plunged 4.3% in August to 5.50 million units (seasonally adjusted annual rate) and are down 12.8% on a year-over-year basis. Concurrently, the median sale price for an existing home fell 1.8% to $224,500 and is down 0.2% compared to last August. Last, inventories jumped 5.3% to 10.0 months of supply and are up 37.0% compared to August 2006. Overall, the housing market remains very weak.

Durable Goods
New orders for durable goods declined 4.9% in August following an upwardly revised 6.1% increase in July. Concurrently, new orders for core capital goods—which signify business investment in equipment and software—decreased 0.7%. Shipments and inventories both decreased for the month, falling 1.6% and 0.1%, respectively. Last, unfilled orders rose 1.2%.